Exam 6: Terms and Concepts

Long-Term Capital Management (LTCM) was a U.S. hedge fund which used trading strategies combined with high leverage. Despite initial enormous profits, it failed spectacularly in 1998. What most likely led to this failure? Select all that apply.

NASDAQ, the National Association of Securities Dealers Automated Quotations, is an American stock exchange. It is the largest electronic screen-based securities trading market in the United States. What is the authority that oversees NASDAQ operations and regulations?

What is Fannie Mae?

Bankruptcy refers to a situation when a court judges that a debtor (or a borrower) is unable to make the payments owed to a creditor (or a lender). America's bankruptcy code for corporate entities can be found in

Which of the following is considered a "hedge fund"? Select all that apply.

On June 30, 2009, Bernard Madoff was sentenced to 150 years for his fraudulent financial activities. He defrauded thousands of investors out of $65 billion. What fraudulent scheme did he use?

What is the primary responsibility of the U.S. Securities and Exchange Commission (SEC)?

Small and illiquid assets that are unable to be sold individually can be pooled together into financial instruments in order to reduce risk and to be sold to general investors. This strategy is called:

As an investor, Tom is obliged to perform due diligence. What is "due diligence"?

A bank run is...

Insolvency refers to:

WePro Ltd. is considered to be highly leveraged. What does "highly leveraged" refer to in the company situation?

Income elasticity of demand is a measure of how demand for a good changes with people's income.

A liquidity trap is...

The Sarbanes-Oxley Act of 2002 is a federal law enacted in reaction to which of the following events?

A hedge fund is...

The Mississippi Scheme was formulated by John Law for the colonization and commercial exploitation of the Mississippi Valley and other French colonial areas. The main reason for its financial collapse in October 1720 was